Who Else Wants to Discover Pros and Cons of Penny Stocks in Only 10 Minutes?
Like any other venture that has rewards and risks, the penny stock pros and cons should be considered before investing heavily in this market.
Penny stocks tend to outperform large cap stocks in times of a recession and early stages of the economic recovery.
Penny stocks offer a chance to make money quickly without investing large sums. These stocks usually sell for under $5 per share making it possible to get started trading with very little money.
Very high returns are quite possible is a short amount of time.
Promotion of the stock will cause 70% of the stocks to double in value. These promotions are the result of the company getting the word to the public about the opportunity to invest in the company.
Penny Stocks can be traded on line with discount brokers, thus keeping trading costs low.
These markets trade in several over the counter bulletin boards and pink sheets in large cities.
Some cons of trading in penny stocks.
Penny stocks do not have to meet the minimum listing standards that the larger cap stocks have to maintain in order to stay on the major stock exchanges.
Good financial reports are often not available to inspect. This makes technical analysis more difficult to evaluate.
The average hold time for penny stocks can run as long as 12 months. These stocks are “thinly traded” and ready buyers may not be available when it is time to sell.
Because it is difficult to find quotations for penny stocks, they may be impossible to price accurately.
The penny stock market is sometimes the home of “pump and dump” scam artists. These operators will buy at a very low price, purchasing enough stock to push up the stock price. As soon as there is a large purchase, they will sell all their shares, which will send the stock price crashing down. They enjoy the profit and the new investors are stuck with depreciated shares of a useless company.
Penny stock pros and cons are not to be dismissed lightly if you are going to be successful in this area of stock investing.
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